Downside Risks Persist, but Bulls Still Have Opportunities

Summary:

The latest suspected round of Japanese FX intervention may have reached as much as JPY 5.01 trillion. As uncertainty surrounding potential intervention by Japanese authorities continues to rise, the upside potential for USDJPY is expected to remain capped in the short term.

BUY USDJPY

EXP

PENDING

154.600

Entry Price

161.500

151.450

156.676 -0.250 -0.16%

Pips

PENDING

151.450

Exit Price

154.600

Entry Price

161.500

Fundamentals

Following the reopening of Japanese markets after the holiday period, the yen stabilized broadly against other G10 and Asian currencies. However, concerns over possible renewed FX intervention by Japanese authorities are likely to limit further upside in USDJPY. In particular, after the pair broke above the 157.00 level, markets have already detected three suspected rounds of intervention, making investors increasingly cautious about pushing the pair significantly higher beyond that threshold.

Data released by the Bank of Japan on Thursday suggested that Japanese authorities may have spent up to JPY 5.01 trillion (approximately $32.06 billion) in their latest efforts to support the weak yen, implying that multiple rounds of intervention may have already taken place. BOJ forecasts for next-day money market conditions showed a net liquidity withdrawal of JPY 4.51 trillion, compared with broker expectations ranging from flat to a net injection of JPY 500 billion. Since yen-buying intervention requires the BOJ to absorb liquidity from the market, unusually large funding shortages are widely viewed as an important proxy for estimating the scale of intervention.

However, market discussions surrounding the idea that “the IMF limits unilateral FX intervention to no more than three times within six months” are largely based on exchange-rate regime classification guidelines rather than any binding restriction. This means that even if Japan continues to increase the frequency of intervention, the primary impact would be on its “free-floating exchange rate” designation rather than on the legality of intervention itself.

Downside Risks Persist, but Bulls Still Have Opportunities_1

Technical Analysis

USDJPY remains slightly biased to the downside intraday, with 156.00 acting as the immediate downside target. A decisive break below this level would expose the second intervention low near 155.00. This area is highly significant; if broken, the pair may need to retreat toward the 152.50 region before finding meaningful support. As long as resistance at 157.92 remains intact, rebound attempts are likely to continue facing downside pressure.

Trade Recommendation

Direction: Buy

Entry: 154.60

Target: 161.50

Stop Loss: 151.45

Valid Until: 2026-06-06 23:55

Support Levels: 155.02, 154.37, 153.78

Resistance Levels: 156.48, 157.39, 157.93

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data